The Public Is Being Looted By Privatization And Deregulation — Paul Craig Roberts

The privatization movement and the deregulation
movement have turned out to be failures.

Privatization in Britain under the Thatcher government had its origin in the
belief that the absence of incentivized managers and shareholders with a stake
in the bottom line resulted in nationalized companies operating inefficiently,
with their losses covered by government like the big private banks’ losses
today. Thatcher’s government believed that privatizing socialized firms would
reduce the UK budget deficit and take pressure off the British pound.

Today privatization is a way that governments can
reward cronies by giving them valuable public resources for a low price. When
the UK government privatized the postal system, there were news reports that
one postal property in London alone was worth the purchase price of the entire
postal service.

Privatization is also a way that conservatives, who
object to social pensions and national health, can stop “taxpayer support of
welfare.” In the US conservatives want to privatize Social Security and
Medicare. In the UK conservatives want to privatize the National Health System.

In the US there are advocates of privatizing the
national forests. In some ways the forests are already privatized as private
timber companies are allowed to “harvest” the trees at favorable prices, and
often the government even builds the roads for them.

In the US deregulation has resulted in high prices and
poor service. When airlines were regulated, they competed on service. They had
spare equipment so that mechanical problems did not mean cancelled flights.
Stopovers did not involve additional costs.

When AT&T had a regulated communication monopoly,
the service was excellent and the price was low. Today we have a large number
of unregulated local monopolies, and the prices are high. The bottom line and
managerial bonuses are more important than service. Customers experience
constant service interruptions. Maintenance and broadband improvements are
sacrificed to executive salaries.

In the US and UK public university tuition has risen
so high that the universities have in effect been privatized. When I went to
college there was no such thing as student loans. In-state tuition was nominal,
and colleges provided inexpensive housing and meals. Most students in state
universities were residents of the state.

Many aspects of the US military have been privatized.
Services that the military formerly provided in-house are now contracted out to
private companies at high costs.

The case for privatization and deregulation needs to
be reexamined in light of the evidence and the real reasons they are being
pursued.

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books areThe Failure of Laissez Faire Capitalism and Economic Dissolution of the West